How to ship items is one of the biggest choices you’ll have to make when selling on Amazon, and there are two main methods: Fulfillment by Amazon (FBA) and Seller Fulfilled Prime (SFP). RepricerExpress is here to help, showing you five key differences between the two so you can make the best decision for yourself.
1. How Items are Fulfilled
This refers to the whole process of picking, packing, and shipping, as well as the costs associated with each.
- FBA: Amazon takes care of the whole thing. You’ll send stock to one (or more) of their distribution centres, and when a buyer purchases an item, Amazon will pick it, package it, and send it on its way.
- SFP: You won’t pay fulfillment fees to Amazon, but you will be in charge of shipping fees. That’s because all the responsibility of sending the product to the buyer rests on your shoulders.
2. The Fees You’ll Pay
It’s not totally free to sell on Amazon, but the fulfillment method you choose will influence the fees you pay.
- FBA: If you choose FBA, you’ll be paying fees for storage/long-term storage and picking/packing/shipping fees that depend on the product’s size.
- SFP: You can avoid these fees, but you can’t avoid costs. You’ll be in charge of storage and shipping, so how well you can source rates depends entirely on you.
3. Where You Store Your Items
Unless you engage in drop-shipping, you’ll need a place to store items before they’re purchased and the orders are fulfilled.
- FBA: Amazon will hold your inventory at one of its distribution centres — for a fee, of course. But the fees change depending on the time of year, how big items are, and how long they’ve been there. For example, items stored between October to December cost more than if stored from January to September, oversize items are less expensive than standard size items, and long-term storage fees can accrue.
- SFP: You can ignore Amazon’s storage fees because they just don’t apply. However, you will need a place to store your inventory. Will that be your home? Do you even have enough space, or will you need to look into a warehouse? And if you opt for a warehouse, what kind of measures do you have in place to ensure inventory management, security, and accessibility?
4. How You Manage Your Inventory
Some merchants like to take a hands-off approach, while others prefer to be very involved every step of the way.
- FBA: The better choice for hands-off merchants because Amazon takes charge of inventory management. You won’t have access to a distribution centre because others will be in charge of it, but the downside is you also can’t drop by from time to time to check in on your stock.
- SFP: If you choose this route, you have much more control over inventory management and can decide how often and when to drop by, how much to stock during busy times without worrying about long-term storage fees, and where you are in inventory load at any given time.
5. Return Options for Products
Last but not least, return options differ based on the fulfillment method you choose. What’s important to note is that Amazon created a new policy midway through 2017 that said, despite FBA or SFP, all items would be automatically authorised for return, meaning buyers can return items if they choose to. What differs is how the return is handled.
- FBA: Amazon takes entire care of this, from accepting the return into a distribution centre to handling the customer support required.
- SFP: You’ll be in charge of the whole process, which can help in reducing potential fraud by being able to see which returned item matches with precisely which order. You’ll also have to abide by the free returns policy, although you may be able to withhold a restocking fee so you don’t lose out.